Thread by @dlauer

Remember in February when Thomas Peterffy said:
"We have come dangerously close to the collapse of the entire system."

I just had a very stimulating discussion on the nature of systemic risk, market structure and leverage / shorting.

How is it even possible that GME could've brought something like this about?

Can you imagine if GME was responsible for the entire market grinding to a halt?

What's even crazier? Nothing has changed, 10 months later. We are 10 months after an event that could have brought the entire US market down, and nothing has changed. Nothing has been done. There is systemic risk in market structure that is not being addressed.

This is dangerous for the REAL economy, not just our casino markets. We are not addressing the elephant in the room, because addressing that elephant means taking on rich and powerful people. Look at the SEC GME report, and tell me they're ready to take it on.

The report was watered down because so many regulators have gone through the revolving door and are now incentivized to maintain the status quo. They will lobby and push and do everything they can to prevent hard choices to be made, and incumbent interests to be threatened.

A system that can be brought down by Gamestop is (no offense) a fragile system that should not be underpinning the US economy. Anyone pushing against major systemic changes is making too much money to care about what happens. This is serious.

We saw the intersection of market structure, systemic risk and the real economy in January, and the only reason crisis was averted was because of underhanded actions to stop people from buying stocks and crash the price of a stock. That's never been done before.

And now they're trying to bury it, and sweep it under the rug, rather than confront the difficult choices that need to be made. Anytime someone calls into question the severity of this risk, remind them of what Peterffy said - "the collapse of the entire system." Because of GME.

This is, of course, about so much more than GME. This has been going on for a long time, and will continue to do so if nothing is done. Significant changes are needed to avoid a crisis. But we all need to be clear eyed about what could have happened in January.

If you game out (pun intended) what would have happened, what Peterffy was talking about, it would have meant systemic firms failing, possibly the DTCC failing, and the entire market halting. Because of shorting, leverage and systemic risk.

We cannot allow that to continue.

The more I've learned about this & the more I've talked to people about this, the more convinced I am that this is the intersection of market structure & the real economy. And that we need fundamental changes to avert future catastrophe. That is not tinfoil hatting - that's math.